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Do Research Universities Recession Proof Their Regions? Evidence from State Flagship College Towns

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Abstract

Using synthetic differences-in-differences models, we study whether U.S. counties containing state flagship universities experienced resiliency via lower unemployment rates during the past three U.S. recessions. We find an insignificant effect for the 2001 recession and a large resiliency effect for the 2008-2009 recession. However, counties with flagship universities faced higher unemployment rates during the 2020 recession, and were therefore less resilient to the Covid-19 recession than other counties. These results support the hypothesis that stable consumption demand for non-tradables drives resiliency, which was absent during the 2020 recession when most university campuses were closed to students due to Covid-19 restrictions.

Suggested Citation

  • Robert Calvert Jump & Adam Scavette, 2024. "Do Research Universities Recession Proof Their Regions? Evidence from State Flagship College Towns," Working Paper 24-05, Federal Reserve Bank of Richmond.
    • Handle: RePEc:fip:fedrwp:98523
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    More about this item

    Keywords

    Regional Business Cycles; Unemployment; Research Universities; Regional Resilience;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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